UK retailers report smallest sales drop since January, CBI says

LONDON, July 27 (Reuters) - British retailers reported the smallest downturn in sales in six months in July but remained gloomy overall due to continued cost pressures, the Confederation of British Industry said on Monday.

The CBI's headline distributive trades balance, which measures activity compared with a year earlier, jumped to -26 in July from -54 in June, its highest reading since January, while sales for the time of year were judged to be below normal for the time of year by the smallest amount since February.

"Retailers reported that the ongoing sales downturn lost steam in July, but a recovery still looks some way off as gloomy sentiment and elevated cost pressures weigh on activity," CBI economist Martin Sartorius said.

• The CBI said it hoped new Prime Minister Andy Burnham's pledge to boost growth "in every postcode" would include lower property taxes for high-street retailers

• The CBI also called on Burnham to tackle rising labour costs and preserve employers' flexibility in hiring when the details of new employment legislation are finalised

• Wholesalers reported broadly unchanged sales volumes in July for the first time in just over 2 years

• Retailers' expected sales volumes for August rose to -26 from -45, the strongest expectations since March

• CBI retail data has been persistently more downbeat than that from the British Retail Consortium and the Office for National Statistics

• ONS retail sales data last week showed 5.4% annual volume growth excluding fuel in the year to June, as a heat wave encouraged shoppers to buy summer clothing and fans online

• The CBI survey was based on responses from 67 retail chains and 105 wholesalers between June 26 and July 14

(Reporting by David MillikenEditing by William Schomberg)